Published July 14, 2022 5:19 pm est
by Richard F. Cason, 
Editor in Chief,
NewsMovesmarketsForex
Key Take away’s-
- Bank of Canada, (BOC), increase Interest Rate by a full 100 basis points to 2.50 percent on June 13, 2022
- BOC continues to initiate Quantitative Tightening Policy for the 2nd consecutive month in a row
- Survey’s reflect that Canadian consumers and business expect inflation to become more entrenched within in the economy in the near term impacting wages and consumer good prices
- BOC MPC acknowledges that inflation has out pace expectation causing the them to increase rates by a full 100 bases point as well as driving the CPI above 8% levels in the near term
- BOC concedes that War in Ukraine and the ongoing global supply disruptions continues to be the driving force behind the inflationary pressures, instigating domestic price pressures, excess demand within the Economy
- Inflation concerns have vastly increased elevating the risk of becoming systemically entrenched in the interim
- Labor markets are tight and reporting vast Labor shortages, wage growth has began to pick up, wage pressures are intensifying
- Russian Ukraine conflict has disrupted global supply chains, China’s COVID-lockdowns, continues to disrupt normal commerce activities weighing heavily on boosting inflationary concerns pushing international agricultural commodities and energy prices higher
- GDP grew by about 4% in second quarter, however; it is expected to slow to about 2% in the third quarter as consumption growth subsides and housing market activity pulls back following unsustainable strength during then pandemic
The Bank of Canada hikes interest rates by 100 bps to 2.50 percent on July 13, 2022. This is the third consecutive month of rate hikes implemented by the Governing Council. which also signaled that it will continue to raise policy interest rates until inflation has tempered. The central bank in yet for the 3rd consecutive month continues to adopt on going quantitative tightening policy for the near term. BOC Bank Rate increases to 2.75 percent, and the deposit rate is at 2.50 percent.
BOC Expects Economy to grow 3.5% in 2022, 1.75% by 2023, 2.50% in 2024
In light of the over all macro economic headwinds of global supply disruptions, the looming War in Ukraine, and the effects of the Covid-19 pandemic China lock downs, exacerbating global exporting commerce; the BOC re-emphasizes that…“China economy is being held back by waves of restrictive measures to contain COVID-19 outbreaks.
Oil prices remain high and volatile, The bank now expects global economic growth to slow to about 3.50% this year and 2% in 2023 before strengthening to 3% in 2024.”
Marc Ostwald Chief Economist & Global Strategist Take A few days Prior to Bank of Canada Interest Rate Decision
I specially asked World renowned economist Marc Ostwald who is is an expert Chief Economist & Global 
Strategist with ADM Investor Services International, head quartered in London England, a few days proceeding the BOC interest rate decisions what his take on the situation was and Mr. Ostwald stated the following:
“The consensus unanimously expect the BoC to hike rates 75 bps to 2.25%, mirroring the Fed and also the largest single month increase since it raised rates by 100 bps to prop up an ailing C$ back in 1998.
Deputy governor Rogers said in June that inflation was “keeping us up at night”, and a 75 bps move would take the BoC’s official rate into its ‘neutral range’ of 2.0-3.0%.
With headline CPI at 7.7% and average core CPI at 4.7%, while Unemployment is at record lows, there is even a case for an even more aggressive 100 bps move, though the likelihood is that it will signal the likelihood of another minimum 50 bps hike in September, and the question in terms of the MPR update is if and how far it might need to move rates into ‘restrictive’ territory.”
BOC Governor Tiff Macklem Economic Opening Statement
It is no secret that the Canadian economy is encountering the global negative economic over tones and down turn, that most G10 Nations are facing, mainly because of rising oil, energy cost, increase consumer goods costs, agriculture cost and so on. Governor Tiff Macklem address these difficult economic concerns in his opening statement in the press briefing, held on July 13, 2022, by stating: “Today, we raised the policy interest rate by 100 basis points, or 1%.
Its reflects very unusual economic circumstances: inflation is nearly 8% – a level not seen in nearly 40 years.
The drivers of inflation are the same in Canada as in most countries. The war in Ukraine and continued supply chain disruptions have boosted inflation in Canada and around the world, But what stared as global inflation driven by higher global energy and goods prices is broadening here at home.”
Governing Council reinforces the path to Price stability to Reach goal of 2% Inflation Target
According to the Bank of Canada governing council: “The policy interest rate remains the Bank’s primary monetary policy instrument, with quantitative tightening acting as a complementary tool. The pace of further increases in the policy rate will be guided by the Bank’s on going assessment of the economy and inflation, and Governing Council is prepared to act more forcefully if need to meet its commitment to achieve the 2% inflation target.”
For more Developing intriguing Central Bank Stories visit our Central Bank Breaking News Here:
Be sure to catch our Previous story on the Bank of Canada Interest Rate decision, June 4, 2022: BANK OF CANADA LIFTS RATES TO 1.50%, AMID HIGH INFLATIONARY PRESSURES, MORE HIKES TO COME
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Expert Economist:
Marc Ostwald an expert Chief Economist & Global Strategist with ADM Investor Services International
Marc Osterwall is a world renowned Expert Economist who Analyzes and forecast macro/microeconomic trends and central bank policies on a exponential economic level. Mr. Osterwall is a regular guest on Bloomberg BNN, HT & Radio, BBC, CNBC, Le Fonti International and is widely quoted on newswires, newspapers, and other digital media worldwide. He is also a regular conference speaker and guest lecturer at various universities.
